Alaska utilities plan $200M investment in grid to boost renewable power, increase reliability

Five electric utilities in Alaska will invest more than $200 million to upgrade the transmission system from Homer to Fairbanks, in a step they say could boost renewable power opportunities in the state.

The improvements will allow more power to flow along the decades-old transmission system along the Alaska Railbelt, said Curtis Thayer, head of the Alaska Energy Authority, a state agency involved in the project.

That will support more low-cost renewable power projects on the horizon and allow the power to move around more efficiently and reliably, benefiting ratepayers, he said.

The utilities involved in the project include the Chugach Electric Association in Anchorage, Golden Valley Electric Association in Fairbanks and the Matanuska Electric Association for the Palmer-Wasilla area. Joining from the Kenai Peninsula are Homer Electric Association and Seward Electric System.

Officials involved in the project have described the upgrades as historic, and say that it will be part of some of the most significant improvements the grid has ever seen, according to a prepared statement.

“For those of us that are looking for a renewable future, this gives us the opportunity to pour more energy from those sources into this line and that to me is going to be significant,” Gov. Mike Dunleavy said at the state’s Alaska Sustainable Energy Conference on Wednesday as the project was announced.

The planned upgrades are part of a broader effort to reduce energy prices across Alaska, he said.

The proposal comes as utilities and the state began to take a hard look at future power sources amid concerns about the long-term availability and cost of natural gas from Cook Inlet, the dominant source of energy along the Railbelt.

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Also, the state is studying a potentially significant addition to the state-owned Bradley Lake Hydroelectric Project near Homer, the largest source of hydropower in Alaska, and the cheapest power on the grid. At the same time, private entities are pursuing large-scale solar and wind projects along the Railbelt.

The transmission upgrades will support the integration of those projects into the system, Thayer said.

The five utilities will pay for the project by reallocating $12.5 million in annual payments owed to the state through 2050, Thayer said — part of an earlier agreement associated with the creation of the Bradley Lake Project in 1991. Under the plan, the energy authority will issue bonds to raise cash for the project.

The project will not cost ratepayers and will help hold down long-term rate increases, he said.

The utilities and the energy authority began working together on the plan last year, Thayer said, and the upgrades will be beneficial immediately.

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The transmission system is so outdated it currently can’t handle all the power produced at Bradley Lake. The lost savings amount to about $600,000 annually, he said.

“These projects increase the value of Bradley Lake to all consumers in the Railbelt from both a cost and reliability perspective, and support the advancement of renewable generation for decades to come,” said Arthur Miller, acting chief executive for Chugach Electric, the largest electric utility in Alaska, in the statement.

Golden Valley Electric, at the grid’s northern end, makes most of its power from coal but has some of the highest rates on the Railbelt. The upgrades will benefit the Fairbanks utility with more access to renewable power made elsewhere on the grid, said its chief executive, John Burns.

Burns called the upgrades a “monumental” step.

“These upgrades provide resiliency and increase capacity to energy from Southcentral, including hydro and additional renewables, and will assist (Golden Valley Electric) as we transition to cleaner energy sources in the future,” Burns said in the statement.

Specifically, the plans call for upgrading three aging transmission lines on the Kenai Peninsula, and a battery storage system to help stabilize power fluctuations.

Jenn Miller, chief executive of Renewable IPP, which a few years ago built the largest solar power farm in Alaska at Willow north of Anchorage, said the upgrades will increase opportunities for companies like hers that sell renewable power to utilities.

Renewable IPP is planning to build two new solar farms that will produce several times more power than the Willow project, in Houston in the Matanuska-Susitna Borough and on the Kenai Peninsula, she said.

The project will give companies like hers more flexibility in getting their power to any Alaskan from Homer to Fairbanks, she said.

Rather than being constrained by what the outdated transmission system can handle, companies will be able to choose the most economic location for their project, which lowers the cost of electricity, benefiting consumers, she said.

“It’s encouraging to see the utilities and the state wanting to go to more renewables,” she said.

The upgrades will also support the new power that could come from the addition at the Bradley Lake project, Thayer said.

The Alaska Energy Authority is studying that potentially $500 million project, known as the Dixon Diversion.

Bradley Lake already provides about 10% of the power for the grid. The Dixon Diversion would significantly increase that power, Thayer said.